Photographer: Taylor Glascock/Bloomberg
Is the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey an accurate indicator of open jobs in the United States?
The JOLTS report on Tuesday stated that 10.72 million jobs were available as of the last day in September, an increase of 437,000 from the prior report. JOLTS provides a gauge of the economy and job market by looking into how many job openings were posted, workers hired, and those who quit or were laid off.
The surge in hiring is both a blessing and a possible curse. Jerome Powell, chair of the Federal Reserve Bank, has been waging war against inflation. Faced with a daunting task, Powell needs to balance bringing down record-high inflation levels by raising interest rates and leveraging other tools without crushing the job market and putting people out of work.
How The JOLTS Report Works
You should approach the JOLTS report with a bit of skepticism. The survey relies upon the U.S. Bureau of Labor Statistics collecting data points about job openings, employment, hires and separations from the payroll.
JOLTS defines “job openings” as all open positions, but not necessarily filled, on the last business day of the month. Relying upon job listings as a critical metric is problematic. Companies don’t just post a job when they want to hire. There are numerous scenarios when jobs are posted but are not real.
Why Some Jobs Are ‘Fake’
When there are layoffs or a challenging economic climate, some businesses will post jobs to make the appearance that the company is doing well and growing while everyone else is floundering.
Many jobs are posted on the company website and end up on job aggregation sites. Time goes by and the company forgets to take down the role. It stays on the career site and an array of third-party job boards. To the job seeker, the roles look new, but they are months old and most have been filled already.
Most companies have a policy to post jobs online to promote diversity hires. They want to show that they are making a good-faith effort to find the best talent—whether promoting from within or through a job listing. Unscrupulous firms use this as cover to hire someone they already know they want to hire. The job posting creates a false impression that it is a fair and open hiring process.
The company can gain a sense of the marketplace by posting phantom jobs. By the responses, they can determine how much money other places are offering or whether the role is considered hot. If the company is looking to downsize or wants to cut a few jobs, the phony roles can offer insight into how hard it would be to find a replacement and at what compensation level.
Companies also place phishing job ads to build a pipeline of candidates for the future. Right now, they may have no interest in interviewing or hiring a person.
Moreover, when people quit, the remaining workers need to pick up the slack. They are forced to work longer hours without any increase in pay. Then, they start complaining about why the company isn’t actively looking to fill the vacancies. To appease the remaining staff, the company places ads without any intention of finding a replacement. They are merely appeasing the workers.
Lastly, interviewers invite people to interview based on the sham job listing. However, there is no intention of hiring the person. The company has someone picked out already. It may be an internal candidate that a senior executive has handpicked for the role. To orchestrate it to seem that the interview process is fair, the unsuspecting applicant doesn’t stand a chance, as the decision was already made, and you’re just part of the charade.
Why 1.9 Jobs Available For Every Unemployed Person Is A Fallacy
The increase in job openings shows that the U.S. job market is still strong, despite efforts by the Fed to cool things down. The report indicates that there are 1.9 job openings for every available worker. While this is good news, the growing demand for workers has caused an increase in wages as businesses compete to find talent, which inadvertently fuels inflation.
The number of job openings compared to the number of people hunting for roles is a key metric watched by the Fed as it tries to thread the needle of maintaining growth without causing inflation to rise more than it is now.
However, this indicator has some flaws. Just because there are a lot of job openings, it doesn’t mean that they are compatible with the job needs and requisites of the people hunting for a new opportunity. The available roles may be lower-paying and dead-end jobs people don’t want.
For example, hospitality and food services, which include bars, restaurants and hotel positions, saw the most significant growth of new jobs added. Many Americans are shying away from frontline roles in pursuit of better-paying jobs with upside-growth potential. Healthcare, transportation and warehouses also accounted for the increase in job listings.
Workers who voluntarily left their jobs remained about the same as last month. Similarly, the percentage of employees who quit their jobs stayed on par with the previous month’s data at 2.7%.
Higher Wages Cause Rising Prices
Americans face a challenge: the costs of food, gas, goods and services have skyrocketed. The higher wages businesses offer to recruit and retain talent contribute to the upward wage-price spiral. Other factors, such as supply chain disruptions, have contributed, along with allegations of companies using inflation as a pretext to price gouge.
The survey reflects that the demand for workers is strong, and the labor market is holding up well. Job openings outnumber unemployed workers. Despite all the talk about quiet quitting and the Great Resignation, the quit rates elevated, but not off the charts. Layoffs, while heavily reported, are below pre-pandemic levels.
